Mindtree Limited Balance sheet Rs in million Note As at … · Cash and bank balances 3.5.3 1,238...

Mindtree LimitedBalance sheet

Rs in millionNote As at As at

March 31, 2013 March 31, 2012EQUITY AND LIABILITIESShareholders' fundsShare capital 3.1.1 415 405 Reserves and surplus 3.1.2 12,722 9,171

13,137 9,576 Non-current liabilitiesLong-term borrowings 3.2.1 32 37 Other long-term liabilities 3.2.2 57 46

89 83 Current liabilitiesShort-term borrowings 3.3.1 217 407 Trade payables 189 107 Other current liabilities 3.3.2 2,166 2,455 Short-term provisions 3.3.3 1,112 724

3,684 3,693 16,910 13,352

ASSETSNon-current assetsFixed assets

Tangible assets 3.4.1 2,561 2,548 Intangible assets 3.4.1 28 43 Capital work-in-progress 571 85

Non-current investments 3.4.2 244 30 Deferred tax assets (net) 3.4.3 360 320 Long-term loans and advances 3.4.4 617 544 Other non-current assets 3.4.5 1,046 1,028

5,427 4,598 Current assetsCurrent investments 3.5.1 4,027 3,075 Trade receivables 3.5.2 4,508 4,078 Cash and bank balances 3.5.3 1,238 585 Short-term loans and advances 3.5.4 430 191 Other current assets 3.5.5 1,280 825

11,483 8,754 16,910 13,352

- Significant accounting policies and notes to the accounts 2&3

The notes referred to above form an integral part of the financial statements

As per our report of even date attachedFor B S R & Co.Chartered AccountantsFirm Registration Number: 101248W

Supreet Sachdev Subroto BagchiPartner ChairmanMembership Number: 205385

Rostow RavananChief Financial Officer

Place: Bangalore Place: BangaloreDate : April 22, 2013 Date : April 22, 2013

N. Krishnakumar CEO & Managing Director

Rajesh Srichand NarangCompany Secretary

For Mindtree Limited

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Mindtree LimitedStatement of profit and loss

Rs in millionParticulars Note

March 31, 2013 March 31, 2012

Revenue from operations 23,618 19,152 Other income 3.6 350 384 Total revenues 23,968 19,536

Expenses:Employee benefits expense 3.7 14,274 12,261 Finance costs 3.7 10 5 Depreciation and amortisation expense 3.4.1 624 695 Other expenses 3.7 4,824 3,958 Total expenses 19,732 16,919

Profit before tax 4,236 2,617

Tax expense: 3.4.3Current tax 887 534 Deferred tax (40) (104) Profit for the year 3,389 2,187

Earnings per equity share 3.17Equity shares of par value Rs 10/- eachBasic 82.70 54.27 Diluted 81.66 54.18 Weighted average number of equity shares used in computing earnings per shareBasic 40,974,712 40,295,202 Diluted 41,496,296 40,363,159

Significant accounting policies and notes to the accounts 2&3


As per our report of even date attachedFor B S R & Co.Chartered AccountantsFirm Registration Number: 101248W

Supreet Sachdev Subroto BagchiPartner ChairmanMembership Number: 205385

Rostow RavananChief Financial Officer



For the year ended

CEO & Managing Director


N. Krishnakumar

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Mindtree LimitedCash flow statement

Rs in million

2013 2012

Cash flow from operating activities

Profit before tax 4,236 2,617

Adjustments for :

Depreciation and amortisation 624 695

Amortization of stock compensation cost 2 -

Interest expense 10 5

Interest/ dividend income (192) (118)

Profit on sale of fixed assets (6) (1)

Profit on sale of investments (133) (27)

Provision for diminution in the value of investments 1 1

Loss on dissolution of subsidiary 3 -

Exchange difference on derivatives (308) (10)

Effect of exchange differences on translation of foreign 28 (3)

currency borrowings

Effect of exchange differences on translation of foreign (30) (18)

currency cash and cash equivalents

Operating profit before working capital changes 4,235 3,141

Changes in trade receivables (430) (1,252)

Changes in loans and advances and other assets (564) 20

Changes in liabilities and provisions 391 721

Net cash provided by operating activities before taxes 3,632 2,630

Income taxes paid (969) (564)

Net cash provided by operating activities 2,663 2,066

Cash flow from investing activities

Purchase of fixed assets (1,066) (484)

Proceeds from sale of fixed assets 9 2

Investment in subsidiary (14) -

Proceeds on dissolution of subsidiary 18 -

Interest/ dividend received from investments 179 119

Purchase of investments (11,257) (8,790)

Sale/ maturities of investments 10,216 6,846

Net cash used in investing activities (1,915) (2,307)

Cash flow from financing activities

Issue of share capital (net of issue expenses paid) 322 144

Interest paid on loans (11) (5)

Repayment of borrowings (941) (5)

Proceeds from loans 719 410

Dividends paid (including distribution tax) (214) (176)

Net cash (used in)/ provided by financing activities (125) 368

Effect of exchange differences on translation of foreign

currency cash and cash equivalents 30 18

Net increase in cash and cash equivalents 653 145

Cash and cash equivalents at the beginning of the year 585 440

Cash and cash equivalents at the end of the year (Refer note 3.5.3) 1,238 585

-


As per our report of even date attached

For B S R & Co. For Mindtree Limited

Chartered Accountants

Firm Registration Number: 101248W

Supreet Sachdev Subroto Bagchi

Partner Chairman

Membership Number: 205385

Rostow Ravanan Rajesh Srichand Narang

Chief Financial Officer Company Secretary


For the year ended March 31,

N. Krishnakumar

CEO & Managing Director

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Mindtree Limited Significant accounting policies and notes to the accounts For the year ended March 31, 2013

1. Background Mindtree Limited (‘Mindtree’ or ‘the Company’) is an international Information Technology consulting and implementation company that delivers business solutions through global software development. The Company is structured into two business units – Information Technology (‘IT’) Services and Product Engineering (‘PE’) Services. IT Services offer consulting and implementation and post production support for customers in manufacturing, financial services, travel and leisure and other industries, in the areas of e-business, data warehousing and business intelligence, supply chain management, ERP and maintenance and re-engineering of legacy mainframe applications. PE Services provides full life cycle product engineering, professional services and sustained engineering services. It also enables faster product realization by leveraging the expertise in the areas of hardware design, embedded software, middleware and testing and through Mindtree’s own IP building blocks in the areas of Bluetooth, VOIP, IVP6, iSCSI and others in datacom, telecom, wireless, storage, industrial automation, avionics, consumer products and computing. The Company is head quartered in Bangalore and has offices in India, United States of America, United Kingdom, Japan, Singapore, Malaysia, Australia, Germany, Switzerland, Sweden, UAE, Netherlands, Canada, Belgium and France.

2. Significant accounting policies

2.1 Basis of preparation of financial statements

The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting except for certain financial instruments which are measured at fair values and comply with the Accounting Standards prescribed by Companies (Accounting Standards) Rules, 2006, as amended, other pronouncements of the Institute of Chartered Accountants of India (‘ICAI’), the relevant provisions of the Companies Act, 1956, (the ‘Act’) and the guidelines issued by Securities and Exchange Board of India (‘SEBI’) to the extent applicable.

2.2 Use of estimates

The preparation of financial statements in conformity with the generally accepted accounting principles (‘GAAP’) in India requires management to make estimates and assumptions that affect the reported amounts of income and expenses of the period, assets and liabilities and disclosures relating to contingent liabilities as of the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in future periods.

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Mindtree Limited Significant accounting policies and notes to the accounts (continued) For the year ended March 31, 2013

2.3 Fixed assets and depreciation

2.3.1 Fixed assets are carried at cost of acquisition (including directly attributable costs such as freight, installation, etc.) or construction less accumulated depreciation. Borrowing costs directly attributable to acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use, are capitalised.

2.3.2 Acquired intangible assets are capitalised at the acquisition price. Internally generated intangible assets are recorded at cost that can be measured reliably during the development phase and when it is probable that future economic benefits that are attributable to the assets will flow to the Company.

2.3.3 Leases under which the Company assumes substantially all the risks and rewards

of ownership are classified as finance leases. Such assets are capitalised at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments under operating leases are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

2.3.4 Advances paid towards the acquisition of fixed assets, outstanding at each

balance sheet date are shown under capital advances. The cost of the fixed asset not ready for its intended use on such date, is disclosed under capital work-in-progress.

2.3.5 Depreciation is provided on the straight-line method. The rates specified under

schedule XIV of the Companies Act, 1956 are considered as minimum rates. If the management’s estimate of the useful life of a fixed asset at the time of the acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the management’s estimate of the useful life/remaining useful life. Pursuant to this policy, the management has estimated the useful life as under:

Asset classification Useful life Buildings 25-30 yearsComputer systems (including software) Test equipment

1-3 years 3 years

Furniture and fixtures 5 yearsElectrical installations 3-5 yearsOffice equipment 4-5 yearsMotor vehicles Plant and machinery Intellectual property

4-5 years 4 years 5 years

2.3.6 Fixed assets individually costing Rs 5,000 or less are fully depreciated in the year

of purchase/ installation. Depreciation on additions and disposals during the year is provided on a pro-rata basis.

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2.3.7 The cost of leasehold land is amortised over the period of the lease. Leasehold improvements and assets acquired on finance lease are amortised over the lease term or useful life, whichever is lower.

2.4 Investments

2.4.1 Non-current investments are carried at cost less any other-than-temporary diminution in value, determined on the specific identification basis.

2.4.2 Current investments are carried at the lower of cost and fair value. The

comparison of cost and fair value is carried out separately in respect of each investment.

2.4.3 Profit or loss on sale of investments is determined as the difference between the

sale price and carrying value of investment, determined individually for each investment.

2.5 Cash and cash equivalents

Cash and cash equivalents comprises cash in hand and balance in bank in current accounts and deposit accounts.

2.6 Cash flow statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the Company are segregated.

2.7 Employee benefits

2.7.1 Gratuity is a defined benefit scheme and is accrued based on actuarial valuations at the balance sheet date, carried out by an independent actuary. The Company has an employees’ gratuity fund managed by ICICI Prudential Life Insurance Company, SBI Life Insurance Company and Life Insurance Corporation of India. Actuarial gains and losses are charged to the statement of profit and loss.

2.7.2 Compensated absences are a long-term employee benefit and is accrued based on

actuarial valuations at the balance sheet date, carried out by an independent actuary. The Company accrues for the expected cost of short-term compensated absences in the period in which the employee renders services.

2.7.3 Contributions payable to the recognised provident fund, which is a defined

contribution scheme, are charged to the statement of profit and loss.

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2.8 Revenue recognition

2.8.1 The Company derives its revenues primarily from software services. Revenue from software development on time-and-material basis is recognised as the related services are rendered. Revenue from fixed price contracts is recognised using the proportionate completion method, which is determined by relating the actual project cost of work performed to date to the estimated total project cost for each contract. Unbilled revenue represents cost and earnings in excess of billings while unearned revenue represents the billing in excess of cost and earnings. Provision for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become probable based on the current contract estimates. Maintenance revenue is recognized ratably over the period of the maintenance contract.

2.8.2 Provision for discounts is recognised on an accrual basis in accordance with contractual terms of agreements with customers. Revenues are stated net of discount.

2.8.3 Dividend income is recognised when the right to receive payment is established.

2.8.4 Interest income is recognized using the time proportion method, based on the

transactional interest rates.

2.9 Foreign exchange transactions

2.9.1 The Company is exposed to foreign currency transactions including foreign currency revenues and receivables. With a view to minimize the volatility arising from fluctuations in currency rates, the Company enters into foreign exchange forward contracts and other derivative instruments.

2.9.2 Foreign exchange transactions are recorded using the exchange rates prevailing

on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the statement of profit and loss for the year.

2.9.3 Monetary assets and liabilities denominated in foreign currencies as at the

balance sheet date are translated at the closing exchange rates on that date; the resultant exchange differences are recognized in the statement of profit and loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

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2.9.4 In respect of integral operations, monetary assets and liabilities are translated at

the exchange rate prevailing at the date of the balance sheet. Non-monetary items are translated at the historical rate. The items in the statement of profit and loss are translated at the rates prevailing on the dates of the respective transactions. The differences arising out of the translation are recognised in the statement of profit and loss.

2.9.5 Forward exchange contracts and other similar instruments that are not in respect

of forecasted transactions are accounted for using the guidance in Accounting Standard (‘AS’) 11, ‘The effects of changes in foreign exchange rates’. For such forward exchange contracts and other similar instruments covered by AS 11, based on the nature and purpose of the contract, either the contracts are recorded based on the forward rate/fair value at the reporting date, or based on the spot exchange rate on the reporting date. For contracts recorded at the spot exchange rates, the premium or discount at the inception is amortized as income or expense over the life of the contract.

2.9.6 For forward exchange contracts and other derivatives that are not covered by

AS 11 and that relate to a firm commitment or highly probable forecasted transactions, the Company has adopted Accounting Standard ('AS') 30, ‘Financial Instruments: Recognition and Measurement’ to the extent that the adoption did not conflict with existing accounting standards and other authoritative pronouncements of the Company Law and other regulatory requirements. In accordance with AS 30, such derivative financial instruments, which qualify for cash flow hedge accounting and where the Company has met all the conditions of cash flow hedge accounting, are fair valued at balance sheet date and the resultant exchange loss/(gain) is debited/credited to the hedge reserve until the transaction is completed. Other derivative instruments are recorded at fair value at the reporting date and the resultant exchange loss/ (gain) is debited/ credited to statement of profit and loss.

2.10 Warranties

Warranty costs (i.e. post contract support services) are estimated by the management on the basis of technical evaluation and past experience. Provision is made for estimated liability in respect of warranty costs in the year of recognition of revenue.

2.11 Provision and contingent liabilities

The Company creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

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Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation.

2.12 Taxation

The current income tax charge is determined in accordance with the relevant tax regulations applicable to the Company. Deferred tax charge or credit are recognised for the future tax consequences attributable to timing difference that result between the profit offered for income taxes and the profit as per the financial statements. Deferred tax in respect of timing difference which originate during the tax holiday period but reverse after the tax holiday period is recognised in the year in which the timing difference originate. For this purpose the timing differences which originate first are considered to reverse first. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/ virtually certain to be realised.

Minimum alternate tax (‘MAT’) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognised as an asset in the balance sheet if there is a convincing evidence that the Company will pay normal tax after the tax holiday period and the resultant assets can be measured reliably. MAT credit entitlement can be carried forward and utilized for a period of ten years from the period in which such credit is availed.

The Company offsets, on a year on year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.

2.13 Earnings per share

In determining earnings per share, the Company considers the net profit after tax and includes the post-tax effect of any extra-ordinary item. The number of equity shares used in computing basic earnings per share is the weighted average number of equity shares outstanding during the year. The number of equity shares used in computing diluted earnings per share comprises weighted average number of equity shares considered for deriving basic earnings per share and also weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

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2.14 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset (including goodwill) may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined; if no impairment loss had been recognized. In respect of goodwill, impairment loss will be reversed only when it is caused by specific external events and their effects have been reversed by subsequent external events.

2.15 Employee stock based compensation The Company measures the compensation cost relating to employee stock options/restricted shares using the intrinsic value method. The compensation cost is amortized over the vesting/service period.

2.16 Government grants Grants from the government are recognised when there is reasonable assurance that: (i) the Company will comply with the conditions attached to them; and (ii) the grant will be received.

Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. Where the Company receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case a non-monetary asset is given free of cost it is recognised at a nominal value.

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3. Notes to the accounts

3.1 Shareholders’ funds

3.1.1 Share capital a) Rs in million

Particulars As at As at March 31, 2013 March 31, 2012

Authorised79,620,000 (March 31, 2012: 79,620,000) equity shares of Rs 10/- each

796 796

Issued, subscribed and paid-up capital41,535,055 (March 31, 2012: 40,543,923) equity shares of Rs 10/- each fully paid

415 405

Total 415 405

b) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the reporting year is as given below: Particulars

No of shares Rs in million No of shares Rs in millionNumber of shares outstanding at the beginning of the year 40,543,923 405 40,035,187 400 Add: Shares issued on exercise of employee stock options 991,132 10 508,736 5 Number of shares outstanding at the end of the year 41,535,055 415 40,543,923 405

As at March 31, 2012


c) The Company has only one class of shares referred to as equity shares having a par value of Rs 10/- each.

Each holder of the equity share, as reflected in the records of the Company as of the date of the shareholder meeting, is entitled to one vote in respect of each share held for all matters submitted to vote in the shareholder meeting.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.

The Board of Directors, at its meeting held on October 16, 2012 declared an interim dividend of 30% (Rs 3 per equity share of par value Rs 10/- each). Further, the Board of Directors declared a second interim dividend of 40% (Rs 4 per equity share of par value Rs 10/- each) and proposed a final dividend of 50% (Rs 5 per equity share of par value Rs 10/- each) for the year ended March 31, 2013. The total dividend appropriation for the year ended March 31, 2013 amounted to Rs 578 million, including corporate dividend tax of Rs 81 million.

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During the year ended March 31, 2012, the amount of per share dividend recognized as distributions to equity shareholders was Rs 4. The dividend for the year ended March 31, 2012 includes Rs 1.50 per share of final dividend, Rs 1.50 per share of interim dividend and a special dividend of Rs 1 per equity share on the occasion of the Company crossing $100 million in revenues and 10,000 Mindtree minds during the quarter ended September 30, 2011. The total dividend appropriation for the year ended March 31, 2012 amounted to Rs 188 million, including corporate dividend tax of Rs 26 million.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

d) Equity shareholder holding more than 5 percent of equity shares along with the

number of equity shares held at the beginning and at the end of the year is as given below:

Sr. No. Name of the shareholder

Number of shares % Number of shares %1 Coffee Day Resorts Private Limited 4,565,442 11.0% 4,565,442 11.3%2 Walden Software Investment Limited - - 3,964,205 9.8%3 Nalanda India Fund Limited 3,949,089 9.5% 3,949,089 9.7%4 Global Technology Ventures Limited 2,498,561 6.0% 2,648,561 6.5%5 Subroto Bagchi 2,078,585 5.0% 2,078,435 5.1%

As at March 31, 2012As at March 31, 2013

e) The Company has not allotted any fully paid up equity shares by way of bonus shares nor has bought back any class of equity shares during the period of five years immediately preceding the balance sheet date. Number of equity shares allotted as fully paid up without payment being received in cash is 1,300,965 during the period of five years immediately preceding March 31, 2013 and March 31, 2012. These shares were allotted to the shareholders of erstwhile Aztecsoft Limited pursuant to the scheme of amalgamation for the financial year ended March 31, 2010.

f) Employee stock based compensation The Company instituted the Employees Stock Option Plan (‘ESOP’) in fiscal 2000, which was approved by the Board of Directors (‘Board’). Under the ESOP, the Company currently administers seven stock option programs. Further, the Company has instituted Employee Restricted Stock Purchase Plan 2012 (‘ERSP 2012’) during the current year.

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Program 1 [ESOP 1999]

Options under this program are exercisable at an exercise price of Rs 10 per option. All stock options have a four-year vesting term and vest at the rate of 15%, 20%, 30% and 35% at the end of 1, 2, 3 and 4 years respectively from the date of grant and become fully exercisable. Each option is entitled to 1 equity share of Rs 10 each. This program extends to employees who have joined on or before September 30, 2001 or have been issued employment offer letters on or before August 7, 2001. This plan was terminated on September 30, 2001. The contractual life of each option is 11 years after the date of grant.

Particulars Year ended March 31,2013 2012

Outstanding options, beginning of the year 4,000 4,088Granted during the year - -Exercised during the year 500 88Lapsed during the year 3,500 -Forfeited during the year - -Outstanding options, end of the year - 4,000Options vested and exercisable, end of the year - 4,000

Program 2 [ESOP 2001]

Options under this program have been granted to employees at an exercise price of Rs 50 per option. All stock options have a four-year vesting term and vest at the rate of 15%, 20%, 30% and 35% at the end of 1, 2, 3 and 4 years respectively from the date of grant and become fully exercisable. Each option is entitled to 1 equity share of Rs 10 each. This program extends to employees who have joined on or after October 1, 2001 or have been issued employment offer letters on or after August 8, 2001 or options granted to existing employees with grant date on or after October 1, 2001. This plan was terminated on April 30, 2006. The contractual life of each option is 11 years after the date of grant.

Particulars Year ended March 31, 2013 2012

Outstanding options, beginning of the year 79,367 126,763Granted during the year - -Exercised during the year 25,837 40,124Lapsed during the year 5,612 7,272Forfeited during the year - -Outstanding options, end of the year 47,918 79,367Options vested and exercisable, end of the year 47,918 79,367

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Program 3 [ESOP 2006 (a)]

Options under this program have been granted to employees at an exercise price of Rs 250 per option. All stock options have a four-year vesting term and vest at the rate of 15%, 20%, 30% and 35% at the end of 1, 2, 3 and 4 years respectively from the date of grant and become fully exercisable. Each option is entitled to 1 equity share of Rs 10 each. This program extends to employees to whom the options are granted on or after May 1, 2006. This plan was terminated on October 25, 2006. The contractual life of each option is 5 years after the date of grant.


Outstanding options, beginning of the year - 83,548Granted during the year - -Exercised during the year - 45,258Lapsed during the year - 38,255Forfeited during the year - 35Outstanding options, end of the year - -Options vested and exercisable, end of the year - -

Program 4 [ESOP 2006 (b)]

Options under this program are granted to employees at an exercise price periodically determined by the Compensation Committee. All stock options have a four-year vesting term and vest at the rate of 15%, 20%, 30% and 35% at the end of 1, 2, 3 and 4 years respectively from the date of grant and become fully exercisable. Each option is entitled to 1 equity share of Rs 10 each. This program extends to employees to whom the options are granted on or after October 25, 2006. The contractual life of each option is 5 years after the date of grant.


Outstanding options, beginning of the year 1,349,038 2,308,946Granted during the year - 110,000Exercised during the year 905,860 408,995Lapsed during the year 97,528 486,768Forfeited during the year 41,000 174,145Outstanding options, end of the year 304,650 1,349,038Options vested and exercisable, end of the year 115,225 1,013,388

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Program 5 [ESOP 2008A]

Options under this program are granted to employees of erstwhile Aztecsoft Limited as per swap ratio of 2:11 as specified in the merger scheme. Each new option is entitled to 1 equity share of Rs 10 each.


Outstanding options, beginning of the year 124,803 150,218

Granted during the year - -

Exercised during the year 14,437 938

Lapsed during the year 2,118 24,477Forfeited during the year - -

Outstanding options, end of the year 108,248 124,803Options vested and exercisable, end of the year 108,248 124,803

Directors’ Stock Option Plan, 2006 (‘DSOP 2006’)

Options under this program have been granted to independent directors at an exercise price periodically determined by the Compensation Committee. All stock options vest equally over three year vesting term at the end of 1, 2 and 3 years respectively from the date of the grant and become fully exercisable. Each option is entitled to 1 equity share of Rs 10 each. The contractual life of each option is 4 years after the date of the grant. Particulars Year ended March 31,

2013 2012Outstanding options, beginning of the year 151,667 165,000Granted during the year 20,000 -

Exercised during the year 36,667 13,333

Lapsed during the year - -

Forfeited during the year - -

Outstanding options, end of the year 135,000 151,667

Options vested and exercisable, end of the year 76,667 75,001

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Program 7 [ESOP 2010A] In-principle approvals for administering the seventh stock option program i.e. ESOP 2010 (A) has been received by the Company from the BSE and NSE for 1,135,000 equity shares of Rs 10 each. No options have been granted under the program as at March 31, 2013. Employee Restricted Stock Purchase Plan 2012 (‘ERSP 2012’) ERSP 2012 was instituted with effect from July 16, 2012 to further issue upto 1,000,000 equity shares of nominal value of Rs 10 each. Shares under this program are granted to employees at an exercise price of not less than Rs 10 per equity share or such higher price as decided by the Board of Directors. Shares shall vest over such term as determined by the Board of Directors not exceeding ten years from the date of the grant. All shares will have a minimum lock in period of one year from the date of allotment. Particulars Year ended March 31,

2013 2012Outstanding shares, beginning of the year - -Granted during the year 7,831 -Exercised during the year 7,831 -Lapsed during the year - -Forfeited during the year - -Outstanding shares, end of the year - -Shares vested and exercisable, end of the year - - The following table summarizes information about the weighted average exercise price of options/shares exercised under various programs:

Amount in Rs Particulars Year ended March 31,

2013 2012 Program 1 10.00 10.00

Program 2 50.00 50.00

Program 3 - 250.00

Program 4 336.84 308.77

Program 5 404.63 161.56

DSOP 2006 259.27 355.00

ERSP 2012 10.00 -

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The following tables summarize information about the options outstanding under various programs as at March 31, 2013 and March 31, 2012 respectively: Particulars As at March 31, 2013

Number of shares

arising out of options

Weighted average remaining

contractual life (in years)

Weighted average exercise

price (in Rs)

Program 1 - - -Program 2 47,918 2.00 50.00Program 3 - - -Program 4 304,650 2.62 491.45Program 5 108,248 3.21 392.82DSOP 2006 135,000 1.95 559.41 Particulars As at March 31, 2012

Number of shares

arising out of options

Weighted average remaining

contractual life (in years)

Weighted average exercise

price (in Rs)

Program 1 4,000 0.04 10.00 Program 2 79,367 2.91 50.00 Program 3 - - - Program 4 1,349,038 1.59 380.25 Program 5 124,803 4.20 390.41 DSOP 2006 151,667 2.23 495.12 The Company has recorded compensation cost for all grants using the intrinsic value-based method of accounting, in line with prescribed SEBI guidelines.

17


Had compensation been determined under the fair value approach described in the Guidance Note on, “Accounting for employee share based payments” issued by ICAI, the Company’s net profit and basic and diluted earnings per share would have reduced to the proforma amounts as indicated:

Rs in million except EPS data

Particulars Year ended March 31,

2013 2012Net profit as reported 3,389 2,187

Add: Stock-based employee compensation expense (intrinsic value method)

- - Less: Stock-based employee compensation expense (fair value method) Pro forma net profit Basic earnings per share as reported Pro forma basic earnings per share

74

3,315

82.70 80.89

78

2,109

54.27 52.34

Diluted earnings per share as reported Pro forma diluted earnings per share

81.66 79.87

54.1852.25

During year ended March 31, 2013, 20,000 options were granted by the Company under DSOP 2006. The weighted average fair value of each option of Mindtree, granted during year ended March 31, 2013 was Rs 393.56 using the Black-Scholes model with the following assumptions: Weighted average grant date share price Rs 556Weighted average exercise price Rs 556Dividend yield % 0.18%Expected life 3 – 5 yearsRisk free interest rate 8.11%Volatility 101.5%

18


3.1.2 Reserves and surplus

Rs in million Particulars As at As at

March 31, 2013 March 31, 2012Capital reserveOpening balance 87 87 Additions during the year - -

87 87 Securities premium reserveOpening balance 1,808 1,669 Additions during the year on exercise of employee stock options

317 139

2,125 1,808 General reserveOpening balance 752 533 Add: Transfer from statement of profit and loss 339 219

1,091 752 Share option outstanding accountOpening balance 48 48 Additions during the year - -

48 48 Hedge reserveOpening balance (250) 81 Additions during the year 423 (331)

173 (250) Surplus (Balance in the statement of proft and loss)Opening balance 6,726 4,946 Add: Amount transferred from statement of profit and loss

3,389 2,187

Amount avalaible for appropriations 10,115 7,133 Appropriations:

Interim dividend (289) (101) Final dividend (208) (61) Dividend distribution tax (81) (26) Amount transfered to general reserve (339) (219)

9,198 6,726

Total 12,722 9,171

19


3.2 Non-current liabilities

3.2.1 Long-term borrowings


March 31, 2013 March 31, 2012(Unsecured)Other loans and advances 32 37 Total 32 37

Long-term borrowings represent the amount received from Council for Scientific and Industrial Research (CSIR) to develop a project under “Development of Intelligent Video Surveillance Server (IVSS) system”. The loan is an unsecured loan carrying a simple interest of 3% p.a on the outstanding amount of loan. Repayment of loan is in 10 equal annual installments commencing from June 2011. The project implementation period was a moratorium period ending May 2011 and was not liable for repayment of installments and interest during the said period. However, the interest accrued during the period is amortized and is payable in 3 equal annual installments commencing from June 2011. Any delay in repayment entails a liability of 12% p.a. compounded monthly for the period of delay. There is no continuing default in the repayment of the principal loan and interest amounts.

3.2.2 Other long-term liabilities


March 31, 2013 March 31, 2012Interest accrued but not due on borrowings - 1 Other long-term liabilities 57 45 Total 57 46

3.3 Current liabilities

3.3.1 Short-term borrowings


March 31, 2013 March 31, 2012(Secured)Other loans from banks 217 407 Total 217 407

20


During the year, the Company has repaid packing credit loans of USD 8 million and availed additional packing credit loan of USD 4 million. These packing credit loans are secured against the trade receivables of the Company. As at March 31, 2013, the Company has outstanding packing credit loan of USD 4 million (As at March 31, 2012: USD 8 million). The Company has taken forward exchange contracts with respect to this loan. In accordance with ‘AS 11’ the forward premium arising at inception is amortized as an expense over the life of the contract. Details of interest rate and repayment terms in respect of above packing credit loan are as below: Name of the bank

Rs in million

Rate of interest p.a

Date of repayment

Rs in million

Rate of interest p.a

Date of repayment

HSBC - - - 254 2.00% 25-May-12HSBC - - - 153 2.39% 31-Aug-12HSBC 217 1.98% 29-May-13 - - - Total 217 407

As at March 31, 2013 As at March 31, 2012

3.3.2 Other current liabilities


March 31, 2013 March 31, 2012Current maturities of long-term debt* 5 5 Interest accrued but not due on borrowings 2 2 Unearned income 36 19 Unpaid dividends 3 3 Creditors for capital goods 105 33 Advances from customers 42 69 Employee related liabilities 1,023 836 Book overdraft 136 125 Other liabilities** 814 1,363 Total 2,166 2,455

*The details of interest rates, repayment and other terms are disclosed under note 3.2.1. **Includes derivative liability of Rs 13 million (As at March 31, 2012: Rs 590 million).

As at March 31, 2013, the Company has outstanding forward contracts amounting to USD 112.75 million (As at March 31, 2012: USD 112.5 million) and Euro 11 million (As at March 31, 2012: Euro 9 million) forward strips and leverage option contracts amounting to NIL (As at March 31, 2012: USD 29.25 million). These derivative instruments have been entered to hedge highly probable forecasted sales.

21


In accordance with the provisions of AS 30, those derivative instruments which qualify for cash flow hedge accounting have been fair valued at balance sheet date and the resultant exchange gain has been credited to hedge reserve (Refer Note 3.1.2). Other derivative instruments that do not qualify for hedge accounting have been fair valued at the balance sheet date and resultant exchange gain of Rs 308 million for the year ended March 31, 2013 (year ended March 31, 2012: gain of Rs 10 million) has been recorded in the statement of profit and loss.

3.3.3 Short-term provisions


March 31, 2013 March 31, 2012Provision for employee benefits- Gratuity 11 1 - Compensated absences 262 228 Provision for taxes 199 257 Provision for discount 145 109 Dividend payable 374 61 Dividend distribution tax payable 61 10 Provision for forseeable losses on contracts - 4 Provision for post contract support services 3 5 Provision for disputed dues* 57 49 Total 1,112 724 *Represents disputed tax dues provided during the previous year pursuant to unfavourable order received from the tax authorities against which the Company has preferred an appeal with the relevant authority. In respect of the provisions of Accounting Standard – 29 ‘Provisions, Contingent Liabilities and Contingent Assets’ (‘AS 29’), the disclosures required have not been provided in accordance with paragraph 72 of AS 29.

22


The following table sets out the status of the gratuity plan as required under AS 15- Employee Benefits.

Particulars As at March 31, 2013


Change in projected benefit obligations Obligations at the beginning of the year 276 265Service cost 62 41Interest cost 19 19Benefits settled (41) (74)Actuarial (gain)/loss 8 25Obligations at end of the year 324 276 Change in plan assets Plan assets at the beginning of the year, at fair value

275

257

Expected return on plan assets 23 19Actuarial gain/(loss) 1 38Contributions 55 35Benefits settled (41) (74)Plan assets at the end of the year, at fair value

313 275

Reconciliation of the present value of the obligation and the fair value of the plan assets

Rs in million

Particulars As at March 31, 2013 2012 2011 2010 2009 Fair value of plan assets at the end of the year

313

275

257

212

132

Present value of defined obligations at the end of the year (324)

(276)

(265)

(208)

(132)Asset/ (liability) recognised in the balance sheet (11) (1)

(8)

4 -

23


Rs in million Particulars For the year ended March 31,

2013 2012Gratuity cost Service cost 62 41Interest cost 19 19Expected return on plan assets (23) (19)Actuarial (gain)/loss 7 (13)Net gratuity cost 65 28Actual return on plan assets 24 56 Assumptions Interest rate 7.96% 8.54%Expected rate of return on plan assets 8% 7.50%Salary increase 6% 6%Attrition rate 13.38% 18.2%Retirement age 60 60 The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. The disclosure of provisions movement as required under the provisions of AS 29 is as follows:- Provision for post contract support services


2013 2012

Balance at the beginning of the year 5 5

Released during the year (2) -

Provision at the end of the year 3 5

24


Provision for discount Rs in million Particulars For the year ended March 31,

2013 2012


Provisions made during the year 144 87

Utilisations during the year (95) (27)

Released during the year (13) -

Provision at the end of the year 145 109

Provision for foreseeable losses on contracts Rs in million Particulars For the year ended March 31,

2013 2012


Provisions made during the year - 12

Utilisations during the year (4) (10)

Provision at the end of the year - 4

These provisions are expected to be utilized over a period of one year.

25


3.4 Non-current assets

3.4.1 Fixed assets

Rs in million

As at Additions Deletions As at As at For the Deletions As at As at As atAssets April 1, 2012 during during March 31, 2013 April 1, 2012 year during March 31, 2013 March 31, 2013 March 31, 2012

the year the year the year

Tangible assetsLeasehold land 425 - - 425 59 12 - 71 354 366 Buildings 1,626 - - 1,626 232 57 - 289 1,337 1,394 Leasehold improvements 1,064 134 12 1,186 708 167 10 865 321 356 Computer systems (including software) 1,636 364 6 1,994 1,425 220 5 1,640 354 211 Test equipment 218 1 - 219 143 55 - 198 21 75 Furniture and fixtures 144 13 6 151 125 19 6 138 13 19 Electrical installations 222 32 7 247 180 31 6 205 42 42 Office equipment 408 82 8 482 330 48 8 370 112 78 Motor vehicles 2 - - 2 2 - - 2 - - Plant and machinery 8 - - 8 1 - - 1 7 7 Total (A) 5,753 626 39 6,340 3,205 609 35 3,779 2,561 2,548 Intangible assetsIntellectual property 67 - - 67 24 15 - 39 28 43 Total (B) 67 - - 67 24 15 - 39 28 43

Total (A+B) 5,820 626 39 6,407 3,229 624 35 3,818 2,589 2,591 Previous year 5,624 282 86 5,820 2,618 695 84 3,229 2,591

Gross block Accumulated depreciation Net book value

26


3.4.2 Non-current investments Rs in million


Investment in mutual funds (quoted) 223 - Investment in equity instruments (unquoted)

- Investment in Trade 8 8 - Investment in subsidiary 14 23

Less: Provision for diminution in value of investments

(1) (1)

Total 244 30

Aggregate amount of quoted investments 223 - Aggregate market value of quoted investments 224 - Aggregate amount of unquoted investments 22 31 Details of investment in mutual funds are as given below:


March 31, 2013 March 31, 2012JP Morgan Mutual Fund 70 - Birla Sun Life Mutual Fund 30 - IDFC Mutual Fund 28 - Tata Mutual Fund 95 - Total 223 - Details of investment in trade unquoted investments are as given below:


March 31, 2013 March 31, 20122,400 (previous year: 2,400) equity shares in Career Community.com Limited 1 1643,790 (previous year: 643,790) Series A Convertible Preferred Stock at US$ 0.0001 each fully paid at premium of US $ 0.2557 each in 30 Second Software Inc 7 7 Total 8 8 Details of investment in subsidiary are as given below:

Rs in million Particulars As at March 31, 2013 As at March 31, 2012

Mindtree Software (Shenzhen) Co., Ltd (‘MSSL’)*

- 23

Mindtree Software (Shanghai) Co., Ltd (‘MSSCL’)**

14 -

Total 14 23

27


*During the year, the Company dissolved MSSL and the funds available with MSSL amounting to Rs 18 million were received by the Company. Consequently, the loss on the dissolution of MSSL amounting to Rs 3 million has been recognised in the statement of profit and loss. **The Company has set up a new subsidiary MSSCL during the year.

3.4.3 Taxes Rs in million

Particulars2013 2012

Tax expense - Current tax 887 672 - MAT credit entitlement - (138)

887 534 Deferred tax (40) (104) Total 847 430


The Company has units at Bangalore, Hyderabad and Chennai registered as Special Economic Zone (SEZ) units which are entitled to a tax holiday under Section 10AA of the Income Tax Act, 1961.

The Company also has STPI units at Bangalore and Pune which are registered as a 100 percent Export Oriented Unit, which were earlier entitled to a tax holiday under Section 10B and Section 10A of the Income Tax Act, 1961.

During the year ended March 31, 2013, the Company has recorded a foreign tax credit of Rs 97 million relating to financial year 2010-2011 and financial year 2011-2012. The Company has reflected this credit in the Income tax return for the financial year 2011-2012 and revised return for the financial year 2010-2011.

28


Deferred tax assets (net): Deferred tax assets included in the balance sheet comprises the following:

Rs in million Particulars As at

March 31, 2013 As at

March 31, 2012

Excess of depreciation as per books over depreciation allowed under Income Tax Act, 1961

215 222

Provision for doubtful debts 10 6

Compensated absence 84 39

Provision for volume discount 34 34

Others 17 19

Total deferred tax assets 360 320

3.4.4 Long-term loans and advances


March 31, 2013 March 31, 2012(Unsecured considered good)Capital advances 127 102 Security deposits* 426 442 Advances recoverable in cash or in kind or for value to be received*

64 -

Total 617 544

*Refer note 3.15 for related party balances.

3.4.5 Other non-current assets Rs in million


(Unsecured considered good)Advance tax and tax deducted at source, net of provision for taxes

848 742

MAT credit entitlement 165 246 Other non-current assets 33 40 Total 1,046 1,028

29


3.5 Current assets

3.5.1 Current investments


March 31, 2013 March 31, 2012Investment in mutual funds (quoted) 3,628 2,750 Less: Provision for diminution in the value of investments

(1) -

Term deposits 400 325 Total 4,027 3,075

Aggregate amount of quoted investments 3,628 2,750 Aggregate market value of quoted investments 3,710 2,803 Aggregate amount of unquoted investments 400 325

Details of investment in mutual funds are as given below: Rs in million


ICICI Prudential Mutual Fund 409 301 IDFC Mutual Fund 228 346 UTI Mutual Fund 248 233 HSBC Mutual Fund 70 170 Franklin Templeton Mutual Fund 310 176 DSP Blackrock Mutual Fund 248 215 Birla Sun Life Mutual Fund 371 291 Reliance Mutual Fund 349 267 Tata Mutual Fund 152 284 DWS Mutual Fund 198 - SBI Mutual Fund 358 50 HDFC Mutual Fund 440 122 Axis Mutual Fund 51 120 Principal Mutual Fund 30 - Kotak Mutual Fund 51 - Sundaram Mutual Fund 50 - Pinebridge Mutual Fund 30 - Fidelity Mutual Fund - 50 IDBI Mutual Fund 35 125 Total 3,628 2,750

30


Details of investments in term deposit are as given below: Rs in million


HDFC Limited 400 200 Janalakshmi Financial Services Private Limited - 125 Total 400 325

3.5.2 Trade receivables Rs in million


(Unsecured)Debts overdue for a period exceeding six months

- considered good 175 26 - considered doubtful 36 21 Other debts - considered good 4,333 4,052 - considered doubtful 10 19

Less: Provision for doubtful debts (46) (40) Total 4,508 4,078

3.5.3 Cash and bank balances Rs in million


Cash and cash equivalentsBalances with banks in current and deposit accounts^ *

1,235 582

Other bank balances** 3 3 Total 1,238 585

* Balances with banks include the following: Rs in millionParticulars As at As at

March 31, 2013 March 31, 2012Balance with banks held as margin money towards guarantees 1 1 Bank deposits with more than 12 months of maturity - 1 **Other bank balances represent balances in respect of unpaid dividends and are considered restricted in nature.

^The deposits maintained by the Company with banks comprises time deposits, which can be withdrawn by the Company at any point without prior notice or penalty on the principal.

31


3.5.4 Short-term loans and advances Rs in million


(Unsecured considered good)Advances recoverable in cash or in kind or for value to be received*

440 191

Less: Provision for doubtful advances (10) - Total 430 191

*Refer note 3.15 for related party balances.

3.5.5 Other current assets Rs in million


Unbilled revenue 637 479 Other current assets* 643 346 Total 1,280 825

*Includes derivative asset of Rs 181 million (As at March 31, 2012: Rs 25 million).

3.6 Other income Rs in million

Particulars2013 2012

Interest income 64 53 Dividend income 128 65 Net gain on sale of investments 133 27 Foreign exchange gain/(loss) - 196 Other non-operating income 25 43 Total 350 384


32


3.7 Expenses

Rs in million Employee benefits expense

2013 2012Salaries and wages 13,029 11,227 Contribution to provident and other funds 1,107 933 Expense on employee stock purchase plan 2 - Staff welfare expenses 136 101 Total 14,274 12,261

Finance costs2013 2012

Interest expense 10 5 Total 10 5

Other expenses2013 2012

Travel expenses 935 999 Sub-contractor charges 861 661 Computer consumables 256 341 Legal and professional charges 249 216 Power and fuel 206 183 Rent (Refer note 3.16) 412 342 Repairs to buildings 55 32 Repairs to machinery 20 16 Insurance 20 20 Rates and taxes 72 103 Exchange loss, net 340 - Other expenses 1,398 1,045 Total 4,824 3,958




33


3.8 Contingent liabilities and commitments a) Estimated amount of contracts remaining to be executed on capital account and not

provided for as at March 31, 2013 is Rs 470 million (March 31, 2012: Rs 420 million).

b) As of the balance sheet date, the Company’s net foreign currency exposure that is not hedged by a derivative instrument or otherwise is Rs 4,018 million (March 31, 2012: Rs 3,709 million).

c) The Company has received income tax assessment for the financial year 2008-09 wherein demand of Rs 24 million has been raised against the Company on account of certain disallowances, adjustments made by the income tax department. A significant portion of this amount arises from the manner of adjustment of brought forward losses in arriving at the taxable profits of the Company. The tax demand for financial year 2008-09 also includes disallowance of portion of profit earned outside India from the STP and SEZ units. Management believes that the position taken by it on the matter is tenable and hence, no adjustment has been made to the financial statements. The Company has filed an appeal against the demands received.

d) The Company has received income tax assessments for financial years 2006-07 and 2007-08 for the erstwhile subsidiary i.e. Mindtree Technologies Private Limited (MTPL) with demands amounting to Rs 11 million and Rs 10 million on account of certain disallowances/ adjustments made by income tax department. Management believes that the position taken by it on the matter is tenable and hence, no adjustment has been made to the financial statements. The Company has filed an appeal against the demand received. The Company has not deposited the amount of demand with the department.

e) The Company has received income tax assessments under Section 143(3) of the Income-tax Act 1961 which pertain to erstwhile Aztecsoft Limited for the financial years 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 wherein demand of Rs 91 million, Rs 49 million, Rs 61 million, Rs 28 million, Rs 58 million, Rs 119 million and Rs 214 million respectively has been raised against the Company. These demands have arisen mainly on account of transfer pricing adjustments made in the order. The Company has not accepted these orders and had been advised by its legal counsel/ advisors to prefer appeals before appellate authorities and accordingly the Company has filed appeals before the Commissioner of Income Tax (Appeals) and ITAT. The Company has deposited Rs.15 million with the department against these demands.

34


During the current year, the Company has received draft assessment order under Section 143(3) of the Income Tax Act 1961 for the financial year 2008-09 wherein demand of Rs 65 million has been raised on account of transfer pricing adjustments and the Company is in the process of filing an appeal before the Dispute Resolution Panel. The Company had received a favourable order from the Commissioner of Income Tax (Appeals) for the year 2001-02 where in the Commissioner of Income Tax (Appeals) has accepted the Company’s contentions and quashed the demand raised. The Income tax department had appealed against the above mentioned order with ITAT. ITAT, in an earlier year have passed an order setting aside both the Order of the Commissioner of Income Tax (Appeals) as well as the Assessing Officer and has remanded the matter back to the assessment officer for re-assessment. The Company has preferred an appeal with the Hon’ble High Court of Karnataka against the order of the ITAT. Further, the Hon’ble High Court of Karnataka has stayed the operation and all further proceedings pursuant to the order passed by the ITAT. During the current year, the Hon’ble High Court of Karnataka has dismissed the appeal filed against the order of ITAT and upheld the order passed by the ITAT and accordingly the case is pending before assessing officer for re-assessment. The Company had appealed against the demands received for financial years 2002-03, 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08. Based on favourable order received by the Company for the financial year 2001-02 and an evaluation of the facts and circumstances, no provision has been made against the above orders in the financial statements.

f) The Company has received an assessment order for financial year 2006-07 for the erstwhile subsidiary Mindtree Wireless Private Limited from the Assistant Commissioner of Income-tax (‘ACIT’) with a demand amounting to Rs 39 million on account of certain other disallowances/ transfer pricing adjustments made by income tax department. Management believes that the position taken by it on the matter is tenable and hence, no adjustment has been made to the financial statements. The Company has filed an appeal with Commissioner of Income Tax (Appeals) against the demand received. The Company has deposited Rs 5 million with the department against this demand.

3.9 Quantitative details The Company is engaged in software development services. Such services are not capable of being expressed in any generic unit and hence, it is not possible to give the quantitative details required under paragraphs 5(viii)(c) of general instructions for preparation of the statement of profit and loss as per revised Schedule VI to the Companies Act, 1956.

35


3.10 Value of imports on CIF basis


2013 2012

Capital goods 238 89

Others 4 9

Total 242 98

3.11 Expenditure in foreign currency

Rs in million

Particulars For the year ended March 31, 2013 2012

Branch office expenses 7,821 5,962

Travel expenses 134 200

Professional charges 21 8

Others 97 540

Total 8,073 6,710

3.12 Earnings in foreign currency Rs in million


Income from software development 22,598 18,069

Other income 17 3

Total 22,615 18,072

3.13 During the year ended March 31, 2013 the Company has remitted in foreign currency,

dividend Rs 8 million (year ended March 31, 2012: Rs. 10 million).

Particulars For the year ended March 31, 2013

For the year ended March 31, 2012

Number of shares held

Final dividend

Interim dividend

Number of shareholders

Final dividend

Interim dividend

Amount remitted (Rs)

1,743,465

1,693,943

46

45

8 million

2,717,566

2,898,930

50

47

10 million

Year to which dividend relates

Final dividend 2011-12

Interim dividend 2012-13

Final dividend 2010-11

Interim dividend 2011-12

36


3.14 Segmental reporting The Company’s operations predominantly relate to providing IT Services and PE Services. Accordingly, the Company considers the business segment as the primary segment and geographical segment based on the location of customers as the secondary segment. The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record income and expenditure in individual segments. Income and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while the remainder of costs are apportioned on an appropriate basis. Certain expenses are not specifically allocable to individual segments as the underlying services are used interchangeably. The Company therefore believes that it is not practical to provide segment disclosures relating to such expenses and accordingly such expenses are separately disclosed as unallocable and directly charged against total income. The assets of the Company are used interchangeably between segments, and the management believes that it is currently not practical to provide segment disclosures relating to total assets and liabilities since a meaningful segregation is not possible. Business segments

Rs in million

Statement of profit and loss for the year ended March 31, 2013

IT Services PE Services Total

Revenues 16,408 7,210 23,618Operating expenses, net 13,214 5,544 18,758Segmental operating income 3,194 1,666 4,860Unallocable expenses 964Profit for the year before interest, other income and tax

3,896

Interest expense (10)Other income 350Net profit before taxes 4,236Income taxes (847)Net profit after taxes 3,389

37


Rs in million Statement of profit and loss for the year ended March 31, 2012

IT Services PE Services Total

Revenues 12,558 6,594 19,152Operating expenses, net 10,463 5,756 16,219Segmental operating income 2,095 838 2,933Unallocable expenses 695Profit for the year before interest, other income and tax

2,238

Interest expense (5)Other income 384Net profit before taxes 2,617Income taxes (430)Net profit after taxes 2,187

Geographical segments

Rs in million Revenues For the year ended March 31,

2013 2012

America 13,411 11,104Europe 6,944 5,013India 1,462 1,490Rest of World 1,801 1,545Total 23,618 19,152

3.15 Related party transactions

Name of related party Nature of relationship

Mindtree Software (Shenzhen) Co Ltd (‘MSSL’), Republic of China

Subsidiary*

Mindtree Software (Shanghai) Co., Ltd (‘MSSCL’), Republic of China

Subsidiary**

Amalgamated Bean Coffee Trading Company Limited (‘ABCTCL’)

These entities are part of Coffee Day Group which through various entities and its promoters holds 21% equity stake in Mindtree, and the group has a nominee on the Mindtree Board. Tanglin Developments

Limited (‘TDL’)

Janalakshmi Financial Services Private Limited

Entity with common key management person

*Dissolved with effect from September 06, 2012. **Incorporated on January 29, 2013.

38


Transactions with the above related parties during the year were: Rs in million

Name of related party

Nature of transaction

For the year ended March 31, 2013 2012

Amalgamated Bean Coffee Trading Company Limited

Procurement of supplies

13 16

Tanglin Developments Limited

Leasing office buildings and land (net)

310 296

Advance paid:

- towards electricity deposit/ charges 220 -

- towards lease rentals 259 -

Advance received back:

- towards electricity deposit/ charges 108 -

- towards lease rentals 147 -

Interest on advance towards electricity charges 3 -

Balances payable to related parties are as follows:

Rs in million

Name of related party As atMarch 31, 2013

As atMarch 31, 2012

Tanglin Developments Limited 9 6

MSSL - 3

39


Balances receivable from related parties are as follows: Rs in million

Name of related party

Nature of transactions


As atMarch 31, 2012

Tanglin Developments Limited

Rental advance

- Current

- Non-current

Advance towards electricity charges

- Current

- Non-current

Security deposit returnable on termination of lease

112

-

48

64

345

-

-

-

345

Interest accrued on advance towards electricity charges

3 -

Janalakshmi Financial Services Private Limited

Interest bearing deposits

-* 125

*Redeemed during the year including interest thereon. Key managerial personnel:

Subroto Bagchi Appointed as Chairman with effect from April 1, 2012

Dr. Albert Hieronimus Appointed as Non-executive Vice Chairman with effect from April 1, 2012

N. Krishnakumar CEO & Managing Director

S. Janakiraman President & Chief Technology Officer

N S Parthasarathy* President & COO

Anjan Lahiri* President – IT Services

R. Srinivasan Non-executive Director of Mindtree

V.G.Siddhartha Non-executive Director of Mindtree

David B. Yoffie Non-executive Director of Mindtree

Prof. Pankaj Chandra Non-executive Director of Mindtree

Ramesh Ramanathan Appointed as Non-executive Director of Mindtree with effect from May 2, 2012

*The Board elected Anjan Lahiri, as an additional Board member to hold office with effect from October 24, 2012 till the date of the next Annual General Meeting of the Company. The Board also elected N S Parthasarathy as an Alternate Director to S Janakiraman, with effect from October 22, 2012.

40


Remuneration paid to key managerial personnel during the year ended March 31, 2013 amounts to Rs 96 million (for the year ended March 31, 2012: Rs 73 million). Dividends paid to directors during the year ended March 31, 2013 amounts to Rs 30 million (for the year ended March 31, 2012 Rs 19 million). The above remuneration excludes gratuity and compensated absences which cannot be separately identified from the composite amount advised by the actuary.

3.16 Lease transactions Lease rental expense under non-cancellable operating lease during the year ended March 31, 2013 amounted to Rs 161 million (for the year ended March 31, 2012: Rs 88 million). Future minimum lease payments under non-cancellable operating lease are as below:

Rs in million Particulars As at

March 31, 2013 As at

March 31, 2012Payable -- Not later than one year 203 138Payable -- Later than one year and not later than five years

521 224

Additionally, the Company leases office facilities and residential facilities under cancellable operating leases. The rental expense under cancelable operating lease during the year ended March 31, 2013 was Rs 251 million (for the year ended March 31, 2012: Rs 254 million).

3.17 Earnings per equity share

Reconciliation of number of shares used in the computation of basic and diluted earnings per share is set out below:

Particulars For the year endedMarch 31, 2013

For the year endedMarch 31, 2012

Basic EPS Diluted EPS

Basic EPS Diluted EPS

Weighted average number of equity shares outstanding during the year

40,974,712 40,974,712 40,295,202 40,295,202

Weighted average number of equity shares resulting from assumed exercise of employee stock options

- 521,584 - 67,957

Weighted average number of equity shares for calculation of earnings per share

40,974,712 41,496,296 40,295,202 40,363,159

41


3.18 Auditor’s remuneration Rs in million


Statutory audit 2 2Tax audit 1 1Quarterly audit 11 11Certification 1 1Reimbursement of expenses 1 -Total 16 15

3.19 The Company has opened a new development center at Gainesville, Florida, US to

broaden its IT and Software consulting offerings to its clients in the US. The state of Florida has offered various incentives targeted to the needs of the development center. The nature and the extent of the government grant is given below:

Rs in million Nature of expenses For the year ended March 31,

2013 2012

Reimbursement of rent 2 -

Grant towards workforce training

4 -

Non-monetary grant of US$ 950,000 for renovation of project facility*

51 -

Total 57 - *The aforesaid grant is subject to fulfillment of certain conditions such as creation of minimum employment with specified average salary and capital investment at the new development center at Gainesville, Florida, US.

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3.20 Dues to micro, small and medium enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the ‘Micro, Small and Medium Enterprises Development Act, 2006’ (‘the Act’). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2013 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

Rs in million

Particulars For the year ended

March 31, 2013For the year ended

March 31, 2012 The principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of accounting year; Nil Nil

The amount of interest paid by the buyer under the Act along with the amounts of the payment made to the supplier beyond the appointed day during each accounting year; Nil Nil

the amount of interest due and payable for the period (where the principal has been paid but interest under the Act not paid); Nil Nil

The amount of interest accrued and remaining unpaid at the end of accounting year; and Nil Nil

The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23. Nil Nil

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3.21 Corresponding figures for the previous year presented have been regrouped, where

necessary, to conform to the current year’s classification.

As per our report attached For B S R & Co. Chartered Accountants Firm Registration No.: 101248W


Supreet Sachdev Partner Membership No.: 205385

Subroto Bagchi Chairman

N. KrishnakumarCEO & Managing Director

Rostow Ravanan Chief Financial Officer


Place: Bangalore Date: April 22, 2013

Place: Bangalore Date: April 22, 2013

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Mindtree Limited Balance sheet Rs in million Note As at … · Cash and bank balances 3.5.3 1,238...

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Transcript of Mindtree Limited Balance sheet Rs in million Note As at … · Cash and bank balances 3.5.3 1,238...